Hershey Q1 Earnings Preview: Impact of Rising Cocoa Prices and Competition from MrBeast’s Feastables

Hershey Co., the renowned chocolate and snack foods company, is set to report its first-quarter financial results on Friday, May 3, 2024, before the market opens. Analysts are keeping a close eye on the company’s performance in the face of rising cocoa prices and competition from new entrants in the market such as YouTube star Jimmy Donaldson’s (known as MrBeast) chocolate brand, Feastables.

Earnings Estimates and Outlook

Analysts expect Hershey’s first-quarter revenue to reach approximately $3.11 billion, according to data from Benzinga Pro, compared to the $2.99 billion reported in the same quarter last year. Earnings per share (EPS) estimates stand at $2.76, down from $2.96 in the first quarter of last year. Despite these projections, Hershey has consistently exceeded EPS estimates for 10 consecutive quarters.

For the full fiscal year, Hershey expects net sales growth of 2% to 3% and adjusted EPS to remain steady at $9.59, mirroring the prior year’s results.

Key Considerations

One primary focus for analysts is the impact of soaring cocoa prices on Hershey’s financial performance and its strategies for managing these cost pressures. Hershey has been actively working to mitigate these challenges by implementing measures such as product size reductions and focusing on non-chocolate items for holiday seasons.

Additionally, commentary on the anticipated effects of higher commodity inflation in the second half of the year will be important for analysts and investors.

Competition from MrBeast’s Feastables

Another significant aspect to watch is the competitive landscape, particularly the rise of MrBeast’s chocolate brand, Feastables. Feastables launched in 2022 and has gained traction in major retail outlets, bolstered by MrBeast’s substantial social media following and a jersey sponsorship deal with the NBA’s Charlotte Hornets.

While Hershey is unlikely to specifically mention MrBeast or Feastables in its commentary, any signs of market share erosion or competitive pressures in the chocolate bar segment could be indicative of challenges posed by the newcomer.

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Stock Performance and Price Action

As of now, Hershey’s stock trades at $194.93, within a 52-week range of $178.82 to $276.88. Over the past year, the company’s share price has decreased by 30%.

Investors will be closely monitoring Hershey’s earnings release and subsequent commentary for insight into how the company plans to navigate the ongoing challenges in the chocolate market, as well as its strategy to address increasing competition and rising commodity prices.